TMI Blog2011 (6) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... till the date of return. The refund, in that case, be made within two months from today. - W.P.T.T.No. 315 of 2007 - - - Dated:- 17-6-2011 - BHASKAR BHATTACHARYA AND SAMBUDDHA CHAKRABARTI JJ. Dr. Debiprosad Pal, Senior Advocate Amar Nath Sen, Ananda Sen and Avra Mazumdar for the petitioner Mrs. Seba Roy and Somakar Ghosh for the respondents JUDGMENT This application under article 226 of the Constitution of India is at the instance of the applicant No. 2 in an application under section 8 of the West Bengal Taxation Tribunal Act and is directed against an order dated July 11, 2006 (Damodhar Cement and Slag Ltd. v. Assistant Commissioner, Commercial Taxes [2007] 8 VST 475 (WBTT)) passed by the West Bengal Taxation Tribunal in Case No. 584 of 2003 thereby dismissing the said application under section 8 of the Act. By the said application under section 8 of the Act, the writ petitioner along with others prayed for declaration that section 16B of the West Bengal Sales Tax Act, 1994 is illegal and ultra vires the Constitution of India in so far as it purported to withdraw and/or frustrate and/or nullify the remission of sales tax allowed to applicant No. 1, Damodh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of July, 1983, the Cement Corporation of India Limited, a Government of India undertaking, purchased from WBIDC, the 58 per cent shares of Damodhar Cement and WBIDC retained the balance 42 per cent shares in Damodhar Cement. In spite of the fact that the entire undertaking of Damodhar Cement was taken over and/or controlled by Cement Corporation of India Limited, a Government of India undertaking, as also by WBIDC, a Government of West Bengal undertaking, due to total mismanagement, Damodhar Cement became a sick company. By an order dated April 21, 1994 issued under section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as, the SICA ), the BIFR declared Damodhar Cement as a sick industrial unit. At the time when Damodhar Cement was declared a sick industrial unit by the BIFR, the company was suffering huge losses of several crore of rupees apart from other liabilities which Damodhar Cement had incurred towards various financial institutions and other persons as would appear from sanctioned scheme of BIFR issued on August 16, 1996. At the time when Damodhar Cement was declared a sick industrial unit by the BIFR, 58 per cent share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t petitioner, on the basis of the said representation and/or promise and/or assurance provided under the Incentive Scheme, it had invested large sums of money to the rune of ₹ 52 crore approximately for purchasing all the shares of Cement Corporation of India Ltd. and also WBIDC and became the new owner of Damodhar Cement. The Incentive Scheme as already pointed out was approved by the State Government. Moreover, pursuant to the provisions of section 15(1) of the SICA, Damodhar Cement made a reference to the BIFR for determination of measures to be adopted in respect of the said company and the BIFR after enquiry and after hearing on April 21, 1994 held that the company had become a sick industrial company in terms of section 3(1)(o) of the SICA and Industrial Development Bank of India was appointed as the operating agent and under the rehabilitation scheme which was prepared in respect of sick unit with the consent of all parties including the Government of West Bengal. The Government of West Bengal agreed to exempt Damodhar Cement from any payment of sales tax both local and CST and purchase tax payable for a period of 9 years from the date of taking over without any ceilin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Commercial Taxes, West Bengal, wherein it was again reaffirmed that in continuation of the letter dated February 4, 1997 regarding sanction of benefits to Damodhar Cement under the West Bengal Incentive Scheme, 1993 he was directed to state in clarification that the benefit sanctioned in favour of the company should be applicable for a period of nine years from the date of commencement of commercial production after the unit is taken over by the new promoter (page 64 of the writ petition). By another letter dated April 23, 1997, the Deputy Secretary, Government of West Bengal, Commerce and Industries Department, informed the Managing Director of Damodhar Cement and Slag Ltd., that he had been directed to inform that the High Powered Committee on Industrial Development had since taken decision in the meeting held on April 4, 1997 for giving the company the benefit of exemption in sales tax payment in the quantity of cement manufactured and sold by it and exemption for the payment of sales tax on purchase of raw materials for a period of nine years from the date of commencement of commercial production without any CAP (see page 65 of the writ petition). As indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that Scheme full (100 per cent) exemption of the payment of sales tax on the sale of cement by the said company in West Bengal for a period of nine years from the date of commencement of commercial production without applying any CAP. Dr. Pal further contends that the exemption also from payment of sales tax due for payment has been allowed by the Governor in terms of para 18.1 of the said scheme of 1993 and the subsequent letters written by the Deputy Secretary, Government of West Bengal, which has been referred to at pages 63 to 65 of the writ application clearly show that unmistakably there has been a clear representation or promise or assurance that the petitioner-company having taken over the ownership/management of Damodhar Cement will be allowed exemption from payment of sales tax for a period of nine years without any CAP. On the basis of the said representation, Dr. Pal continues, the petitioner had not only invested near about ₹ 29 crore for acquiring the ownership/ management of Damodhar Cement by purchasing all the shares of Cement Corporation of India, a Central Government undertaking and also the shares of WBIDC, a State Government undertaking as in spite of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Bengal Sales Tax Act, 1994 came into force from March 23, 1995, the Bengal Finance (Sales Tax) Act, 1941 was operative and the turnover tax introduced under section 6B of the said Act was also in force. At this juncture, Dr. Pal submits that under section 2(35) of the West Bengal Sales Tax Act, 1994, tax has been defined to mean tax payable under this Act, i.e., under the West Bengal Sales Tax Act, 1994 and includes surcharge payable under section 16, additional surcharge payable under section 16A, turnover tax payable under section 16B and additional sales tax payable under section 18A. Therefore, according to Dr. Pal, both under the Bengal Finance (Sales Tax) Act, 1941 and under the West Bengal Sales Tax Act, 1994, tax means sales tax payable under the Act of 1941 as also under the Act of 1994 and includes surcharge, additional surcharge, turnover tax and additional sales tax. Dr. Pal contends that sales tax payable by every dealer whose gross turnover during the year exceeds the taxable quantum (vide section 4 of the Bengal Finance (Sales Tax) Act, 1941). Similarly under section 6B of the Bengal Finance (Sales Tax) Act, 1941 every dealer whose aggregate of the gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resents sales in the course of inter-State trade or commerce within the meaning of section 3 of the CST Act or in the course of import of goods into and export out of the territory of India within the meaning of section 5 of that Act. Dr. Pal submits that taxable turnover is payable in addition to the general sales tax which is levied under section 9 or 10 of the West Bengal Sales Tax Act, 1994 and the taxable event under sections 9, 10 and 16B of the West Bengal Sales Tax Act, 1994 is the quantum of sales aggregate of which constitute the turnover. It will, therefore, appear that under the Act of 1994, both sales tax payable under sections 9 and 10 and turnover tax payable under section 16B are in respect of turnover of a dealer. In this connection, Dr. Pal relies upon the definition of turnover of sales in relation to any period which means the aggregate of the sale prices or parts of sale prices receivable by a dealer or if a dealer so elects, actually received by the dealer, during such period after deducting therefrom the various items referred to in section 2(40) of the Act of 1994. Dr. Pal, therefore, contends that under the Bengal Act of 1941 turnover tax under section 6B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l submits that the doctrine of promissory estoppel has been explained by the apex court in the case of Union of India v. Anglo-Afghan Agencies reported in AIR 1968 SC 718. In that case, the court pointed out that the order which the Central Government had issued in exercise of the power conferred by section 3 of the Imports and Exports Control Act might be executive or legislative and in exercise of that power, the order that was issued on December 7, 1955 was clearly legislative in character. The Supreme Court pointed out that in spite of the said order which was legislative in character and which was issued in 1962, the promise made by the Textile Commissioner in the year 1955 in respect of export of woollen goods to Afganisthan was to be in force on the basis of the doctrine of promissory estoppel and the court applied the principle of promissory estoppel even when subsequently the Import Control Order was passed in 1962. The said judgment has been quoted with full approval in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh reported in [1979] 44 STC 42 (SC) ; [1979] 118 ITR 326 (SC), at pages 361, 368 and 369. The Supreme Court at page 361 observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 67-68 of the writ petition, petitioner's company enjoyed 100 per cent sales tax exemption for nine years since October 30, 1996 and it was renewed year to year and up to October 30, 2003. But on August 5, 2003 when by an amendment, section 16B came into effect, the petitioner's company made a prayer through letters dated September 19, 2003 and August 22, 2003 to the Principal Secretary, Commerce and Industries Department to exempt it from the payment of turnover tax and there was no whisper in those letters that the said company had got remission from payment of sales tax as well as from payment of turnover tax. By those letters, the petitioner-company admitted that the turnover tax is a fresh one and not exempted. The second contention of Mrs. Roy is that BIFR by its revival scheme had sanctioned the exemption to the sick company from of sales tax and purchase tax, but there was no exemption from payment of turnover tax. According to Mrs. Roy, turnover tax is not the substitute of sales and purchase tax and there is no manner of doubt that tax levied upon sales of goods is the sales tax whereas the tax levied upon on the turnover of sales tax is turnover tax. Mrs. Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to hold that there was a promise made by the Government with regarding to liability of payment of turnover tax, in that event, the court should bear in mind that there is a bar under sub-section (2) of section 16B of the 1994 Act. The Government, according to Mrs. Roy, cannot afford to act in a way which is prohibited by law and there can also be no promissory estoppel against the exercise of its legislative function of the State. Reliance, in this connection, was placed on judgments reported in:- (1) Bangalore Development Authority v. R. Hanumaiah reported in AIR 2005 SC 3631 (para 32); (2) Motilal Padampat Sugar Mitts Co. Ltd. v. State of Uttar Pradesh reported in [1979] 44 STC 42 (SQ ; [1979] 118 ITR 326 (SC) ; AIR 1979 SC 621 (para 28). Mrs. Roy, thus, prays for dismissal of this writ application. Therefore, the only question that arises for determination in this appeal is whether the appellant is entitled to the benefit of the exemption from the payment of turnover tax as contemplated under section 16B of the West Bengal Sales Tax Act, 1994 by virtue of the remission granted under the Scheme of 1993 and also with the aid of the order passed by the BIFR n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate under the Incentive Scheme of 1993 as amended. The Incentive Scheme of 1993 as amended in 1994 also provides incentive of new owner/management from a closed unit equivalent to that to a new unit available under para 14 of the Incentive Scheme. Next, it will be appropriate to consider the real nature of the turnover tax introduced by way of insertion through amendment in section 16B of the West Bengal Sales Tax Act, 1994 as also the position which existed under section 6B of the Bengal Finance (Sales Tax) Act, 1941, which was in force when the Scheme of 1993 was introduced. When the Incentive Scheme of 1993 was introduced, the turnover tax was very much in existence under section 6B of the Bengal Finance (Sales Tax) Act, 1941 and for that reason, the reference to turnover tax was specifically found in para 3(xxii) of the Scheme and at the same time, when the West Bengal Sales Tax Act, 1994 was enacted repealing, inter alia, the Bengal Finance (Sales Tax) Act, 1941, the saving clause of the 1994 Act, i.e., section 106(2) provided that notwithstanding the repeal of the Bengal Finance (Sales Tax) Act, 1941, such repeal should not affect any right, privilege, obligation or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to such a deduction which may be allowed under the Act and thus, there is no difference between the quality and character of sales tax and turnover tax and the yardstick by which such turnover tax is levied is by reference to the turnover of sales exceeding a certain specified amount. Similar is the position under the West Bengal Sales Tax Act, 1994 and as would appear from the said Act, tax has been defined under section 2(35) of the West Bengal Sales Tax Act, 1994 to mean the tax payable under this Act, i.e., the West Bengal Sales Tax Act, 1994 and includes surcharge payable under section 16, additional surcharge payable under section 16A, turnover tax payable under section 16B and additional sales tax payable under section 18A and the liability to pay sales tax is provided under section 9. Both under section 9(1) and 9(2), sales tax liability arises if the gross turnover of a dealer exceeds the taxable quantum at any time during the relevant year. The liability to pay turnover tax is cast upon every dealer who had incurred liability to pay sales tax under section 9 or 10 and shall be liable to pay turnover tax at the rates specified in column 3 of Schedule VIIIB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax in the eye of law. A Division Bench of this court in the case of the Century Spinning Mfg. Co. v. State of West Bengal reported in [1989] 73 STC 277 (Cal) had the occasion to consider the question of legality and validity of the provision of section 6B of the Bengal Finance (Sales Tax) Act and section 4AAA of the West Bengal Sales Tax Act, 1954 providing levy of turnover tax on the dealers whose turnover exceeded the prescribed limit. In that context, while approving the power of imposition, the Division Bench observed as follows (page 288 in 73 STC):- In our opinion, in the ultimate analysis, turnover tax is a tax on sales and not on income. What constitutes the gross annual turnover of a dealer is the sale proceeds of individual sale transactions effected during the accounting period, and, therefore, the turnover tax which is imposable on taxable turnover of a dealer is a tax on each sale transaction of a dealer and is, therefore pure and simple sales tax and nothing else. It would be a misnomer to call it a tax on income. . . .... Once it is held that 'turnover tax' is a tax on sales imposed in addition to the tax on sales envisaged by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e because in that event, the turnover tax not being a sales tax would not be within the legislative competence of the State Legislature as the State Legislature has been empowered to legislate only the sales tax other than tax on newspaper under entry No. 54 of List II of the Seventh Schedule to the Constitution. Such an interpretation will deprive the State of its power of legislation imposing turnover tax as a different item of tax other than sales tax and hence, the State Legislature has no power to impose any such tax under entry 54 of List II of the Seventh Schedule to the Constitution. In the case of State of Karnataka v. Sunagar Bros. reported in [1993] 89 STC 532 (SC) ; [1993] 3 SCC 16, the Supreme Court was considering the question whether the additional tax leviable under the Karnataka Sales Tax Act, 1957 is also required to be deposited along with the sales tax in order to prefer an appeal and in that context, made the following observations (page 534 in 89 STC):- It is obvious that the additional tax is leviable at the rate of ten paise in the rupee on the sales tax or purchase tax or both, payable by such dealer. The additional tax is computed with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional sales tax is not a tax on sales but on the income of the dealer is without any basis. Thus, in view of catena of judicial decisions of the apex court, the law is settled that the sales tax imposed either under the Bengal Finance Sales Tax Act, 1941 or under the West Bengal Sales Tax Act, 1994 includes also turnover tax, additional surcharge or additional sales tax. In all the aforesaid impositions, the tax is levied on the turnover of sales which represents the aggregate of sale price subject to certain deductions allowed under the respective law. Therefore, when in the Incentive Scheme of 1993 and also the amendment of the said Scheme after the coming into operation of the Act of 1994 by way of adoption, it is specifically made dear that exemption from sales tax due for payment would be allowed in para 14 of the Incentive Scheme of 1993 and also para 18 of the said Scheme and the said Scheme was also adopted by including the definition of sales tax in the amendment Act of 1994 and in view of the notification issued by the Governor of West Bengal allowing exemption in terms of para 18 of the Incentive Scheme for a period of 9 years from the date of commencement of the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r three-Judge Bench in the case of Union of India v. Godfrey Philips India Ltd. reported in [1986] 158 ITR 574 (SC) ; [1986] 59 Comp Cas 526 (SC) ; AIR 1986 SC 806 took into consideration various subsequent decisions on the point and strongly relied upon the following observations of the said court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 44 STC 42 (SC) ; [1979] 118 ITR 326 (SC) ; AIR 1979 SC 621 (page 72 in 44 STC):- The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by article 299 of the Constitution. It is elementary that in a Republic governed by the rule of law, no one, howsoever high or low, is above the law. Everyone is subject to the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Padampat Sugar Mill's case [1979] 44 STC 42 (SC) ; [1979] 118 ITR 326 (SC) ; AIR 1978 SC 621 and we find ourselves wholly in agreement with what has been said in that decision on this point. Applying the aforesaid principles to the facts of the present case, we find that in the present case, the Incentive Scheme of 1993 was issued by the Government as it was of the opinion that it was necessary and expedient in the public interest to extend incentives for promotion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and enabled the State to get out of the commitments. The Supreme Court on these facts observed that it was inclined to agree with the submissions made on behalf of the petitioners that the circumstances gave rise to a fact-situation of estoppel. The Supreme Court further pointed out that it was true that there is no estoppel against the Legislature and the vires of the Act could not be tested by invoking the plea but so far as the State Government is concerned, the rule of estoppel did apply and the precedents of the Supreme Court were clear. Thus, the said decision dearly postulates that even though there may not be any promissory estoppel against the Legislature, yet, if on the basis of the representation and promise made by the Government, certain concessions have been allowed, the State Government may be compelled to honour its promise and allow the benefit of exemption on the basis of the doctrine of promissory estoppel even though the legislative provision need not be challenged. The Supreme Court in the case of Mahabir Vegetable Oils Pvt. Ltd. v. State of Haryana reported in [2006] 145 STC 350 (SC) ; [2006] 3 SCC 620 has taken note of almost all the decisions on the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was allowed to the tax referred to in section 4 only. Section 4AA categorically indicated that notwithstanding anything contained in section 4 of the Act, the exemption might be allowed under certain circumstances by the State Government. Thus, it was clear that the exemption under section 4AA was restricted to the tax paid under section 4. The exemption under section_4AA did not refer to tax which had been levied under section 4AAA. The Supreme Court, therefore, pointed out at paragraph 5 of the said judgment that on perusal of the provisions of sections 4, 4AA, and 4AAA which are clear and unambiguous, there was no scope of doubt that the Legislature had itself referred to two forms of impost under the Act differently. In section 4 it was referred to as a tax , whereas in section 4AAA, it is referred to as a turnover tax and the said difference in nomenclature was consistently maintained in the said sections as well as other sections of the Act. The Supreme Court thereafter referred to section 4AA which opened with a non obstante clause and provided that despite the provisions of charging section 4, if the State Government was satisfied that it was in the public interest so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions, with which we are faced, were not at all considered and thus, the said decision is not a precedent for the questions dealt with by us. In the case of Bangalore Development Authority v. R. Hanumaiah AIR 2005 SC 3631, the other decision cited by Mrs. Roy, the land acquired for development scheme could not be re-conveyed to the owner by the development authority. There was no power under the Act or the Rules with the Bangalore Development Authority to re-convey the acquired land. Therefore, when the land was re-conveyed after acquisition to the private persons, such action was without the authority of law and beyond the power and jurisdiction of the Bangalore Development Authority. It is in this context, that the Supreme Court observed that there was no provision in the Act and the Rules framed enabling Bangalore Development Authority to re-convey the land acquired to implement a scheme for forming of sites and their allotment as per Rules. As the Rules did not provide for re-conveyance, the Supreme Court pointed out that the rule of promissory estoppel could not be availed of to permit or condone a breach of law. In the case before us, the promise was made in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a specific order passed by the BIFR, the writ petition should succeed for an additional reason. As pointed out earlier, if the sales tax includes turnover tax, which undoubtedly is the law as laid down by the apex court and also the Division Bench of this court indicated earlier, then the exemption granted by BIFR will also includes sales tax as well as turnover tax and the exemption which is allowed by BIFR shall be enforceable under section 32 of SICA and any condition or provision under the West Bengal Sales Tax Act, 1994 which is inconsistent with or repugnant to the SICA, being a Central Act, will have to yield to the Central Act. There is no dispute that the statutory provision of section 32 of the SICA overrides all State laws, viz., sales tax laws enacted under entry 54 of List II of the Seventh Schedule. The claim of exemption from sales tax allowed on the basis of the order made by BIFR is to be applicable notwithstanding anything contained in any other law to the contrary excepting the Foreign Exchange Regulation Act and Urban Land Ceiling Act. Therefore, under section 32 of the SICA, the exemption that has been allowed in respect of sales tax will override any other pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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